LONDON (Reuters) - Sterling lost 0.6%, or around one cent, versus the dollar after the Bank of England said that it had been briefed on how a negative interest rate could be implemented effectively, should it be needed.
Sterling was steady near $1.298 before the statement and fell to as low as $1.2883, losing around 0.6%. It also fell versus the euro, down around 0.5% on the day at 91.505 pence per euro at 1113 GMT.
British government bond yields also nudged lower after the BoE comments. Yields on two-year gilts were last down 2.5 basis points on the day at -0.08%.
Money markets ramped up their expectations of British interest rates entering negative territory. Futures contracts maturing in February 2021 were pricing in policy rates falling below zero for the first time compared to March 2021 earlier.
Reporting by Elizabeth Howcroft
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